Cheaper Avios redemptions as Air Passenger Duty cut in budget

From a miles and points perspective, the key point in the UK Budget Statement yesterday was not the cut in Bingo Duty to 10%, nor the freezing of cider duty, but a cut in the rate of Air Passenger Duty to certain long-haul destinations.

Budget box

Except for one flight from Belfast, the current rates of Air Passenger Duty are as follows:

0 – 2,000 miles:   Economy £13, Other £26

2,000 – 4,000 miles:  Economy £67, Other £134

4,000 – 6,000 miles:  Economy £83, Other £166

6,001 miles:  Economy £94, Other £188

The distances are NOT based on your flight but the distance from London to the capital city of the country you are visiting.  The exact band for each country can be found in Appendix 1 here. In the changes announced yesterday, the two highest bands will be abolished from 1st April 2015.   Based on the current figures, which will be adjusted for inflation before April 2015, APD on Economy tickets to anywhere over roughly 8 hours flying time will fall by up to £27 and by up to £54 in Business. The numbers are still crazy, of course.  A family of four flying in Economy will still face a tax bill of £268.  Any reduction is better than nothing, though. The Chancellor also announced an increase in the Regional Air Connectivity Fund, which either a) wastes your money by paying airlines to operate uneconomic routes or b) encourages airlines to launch new routes at a time of economic hardship, depending on your political leaning!

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Comments

  1. Welcome news for Virgin+ BA, from April 2015 allows them to increase the inappropriately named “fuel surcharges” on Bus. Class redemptions without increasing the total price.

    • Totally agree, I checked out the flights I normally get to Brazil in economy, and of the £388 in ‘charges’ only £85 was APD and £20 similar charges from the Brazilian Govt, rest was fuel and other surcharges levied by BA. Don’t see the justification for these and think BA will simply not pass on savings to the consumer.

      • It makes no difference for cash bookings and if they couldn’t charge a carrier fee for avios bookings they’d just make it up elsewhere.

  2. As the one flight from Belfast already shows, airlines will simply increase their prices and profits

  3. Good news but the cynic in me thinks that the inequities fuel surcharge, now called something else by BA will simply rise. Even if it does not, it means that the fees charged by airlines remain ludicrously high (more than double any APD) if APD is damaging Their own fees must be similarly so.

  4. It’s just like fuel duty – no chancellor can ever win here because if he/she dropped the price of petrol in my car the petrol companies would just retain the difference. The airlines are no less cynical.

    • You should take a look at the margins of petrol retailers, most don’t make any money. That’s why so many have closed in recent years.

  5. Well approximately and on average, 60% of VAT is borne by the supplier, when supply and demand are both elastic. APD is not exactly the same, but this would mean that flights to HKG in Y could potentially become cheaper by about £5 to £10, by which I mean YQ will rise by £5 to £10 less than it otherwise would :p

  6. Erico1875 says:

    So he knocks £55 off a long haul business class flight. Champagne just got cheaper.
    Absolutely NADA for the masses whose only pleasure is a week, flying Ryanair to the Costas

  7. pazza2000 says:

    Never have really understood APD; the ‘capital’ rule puts the Caribbean in Band C and Hawaii, almost 3 times the distance away, in the lesser Band B. By that logic, scrapping band C (& D) makes sense.

  8. James67 says:

    The Gulf carriers may reflect in real lower fares but whether that has a knock-on effect on the likes of BA remains to be seen. Positioning flights from Europe will remain nore economically viable despite the change

  9. I think this makes a difference to those using a 2-4-1 from Amex on long haul premium seats as it makes it cheaper to fly from London than head to, say, Jersey, to lower the APD element of the charges imposes on top of the abios.

  10. Now BA can raise their YQ to match the difference and customers won’t notice.

  11. Slightly off-topic – there seems or seemed to be increased reward flight availability to the States today, for some reason.

  12. I read the Brazilian government does not allow airlines to charge for the fuel surcharge, I’ve never tried booking one but if you go on the Brazilian Expedia site there are some really cheap fares e.g. London return to Perth (Australia) £422.

    • Correct. However, tickets are meant to start in Brazil – the current fares are mistakes.

    • I’ve done some redemptions in/from Brazil, and they were cheap. On their local ff programs, the cost after points was negligible and when doing a long haul to London, a single on half points, half cash still only cost £160 – £80 each for ticket portion and for fees. Double that for a return and it’s still far less than you’d pay on BA for a full points redemption.

      As for the new “savings”, fares move around so much there is no way you’d be able to see if a fare is cheaper tomorrow than yesterday, and so while BA and pals may claim to pass on savings, you know you won’t see them. But it’s ok, cos instead you can stay home and save your 1p per pint at the local!

      • Hi Trevor…

        Did you use avios for internal flights in Brasil…would be interested to here how that worked out?
        regards
        newtownards@hotmail.com

        • Not Avios, I was a member of their local ff programs as stated above, for GOL and TAM. At the time TAM was still a Star Alliance member, but since it’ll be Oneworld in 10 days time, it’ll be interesting to see what redemptions cost there using Avios.

  13. I just refuse to fly into or out of a country that is so tax happy. I’ll arrive by train instead.

  14. No doubt I’ll be shot down in flames, but I take issues with your claim that APD charges are crazy!

    I’m a regular traveller, so pay my fair share of the tax … but I accept that flying causes pollution, and is therefore something that should be taxed (especially as we don’t pay VAT on our tickets).

    Whilst leaving aside the minority of people who take an extra trip to Amsterdam to avoid the UK APD rates, it does work in that we either pay it, or we reduce our travel to avoid it.

    • How does taxing air travel reduce pollution? It’s a money grab, plain and simple. If anything the tax increases pollution as people fly further to avoid the tax.

Trackbacks

  1. […] It’s getting cheaper to fly to London.  Head for Points has the scoop here (HT to View From the Wing as well).  Departure taxes can make it a bad value to redeem miles for a coach award to/from London.  A drop of roughly $40-50 a ticket for coach and almost $100 on a premium cabin ticket is a decent reduction.  Still pricey, but more reasonable. […]